Overview of the selected NZ business
The aim of the report is to conduct the situational analysis of the New Zealand based company. The situational analysis is refers to as the collection of a method that is used by the managers to analyse an organisation internal and external environment. It is essential to understand the capabilities, customers and business environment of the selected company as it is performing its business operations in competitive market. The company that has been selected to conduct the situational analysis is Fonterra. The report will include the analysis of environment scanning, the impact of emerging technologies and trends that can impact the company. Moreover, the analysis of the segmentation and targeting has been done which shows that to which customers Fonterra is likely to offer the products and services.
Fonterra is a New Zealand multinational dairy co-operative company which is owned by approx. 10,500 New Zealand farmers. The company came into existence in the year 2001 October with the motive of a fundamental belief in the power of dairy to make a difference (Fonterra, 2018).
Vision: – The vision of the company is to grow the volumes and value of the products and to grow the business in the international emerging markets. In simple words, the company is willing to grow volumes to become the world’s leading dairy exporters (Hembry, 2012).
Mission: – The mission of the company is to refresh the world in body, mind and spirit. The mission statement of the company to dedicate the upholding of Fonterra’s standards while maintaining the leadership position in the dairy industry when offering the advances customers services in a profitable and efficient manner.
The values of the company show that they have different cultural, professional and personal experiences. In addition, the share value allows the company to get combine the personal strength with other resources in order to make the Fonterra stronger, better, more innovative and successful in the market (Fonterra, 2018).
The products which are offered by the company are dairy products which mainly include Anchor (milk, butter, and cream), Anchor Greek Yoghurt, Galaxy, Mainland, Perfect Italiano and many others (Fonterra, 2018). The products range which is offered by the company is not only for the adult people but it is also available for the kids in the New Zealand market.
The products that are offered by the company are enjoyed by the hundreds of people in approx. 140 countries because they get everything from their farms (Fonterra, 2018). This shows that they always ensure to provide the great care to protect the natural goodness of the dairy. The products which are offered by the company are fresh and refreshing which can easily grab the attention of the different people present in the market. This is one of the major reasons due to which the customers make the purchase of the products.
Corporate cultural values
The core competency of the company is that it stands on the good position when the supply of the dairy ingredients and commodities are done by the company in the international markets. Along with this, the company make use of the effective marketing strategy in international marketing. There are very fewer companies that are present in the New Zealand market who are able to supply the dairy products in the other international markets (Browden, Scott and Rowarth, 2013). This makes the company different from their major competitors. Along with this, the analysis also reflects global consumer making and branding strategies. These strategies include cost-efficient milk operations, business-to-business marketing skills and the dairy food technologies. All these elements reflect the core competencies of the company.
The key competitive advantage that is maintained by the Fonterra Company includes maintaining the lowest cost supplier of the dairy products commodity. The company is able to reduce the cost of the products that offered by them due to the decrease in the manufacturing costs and streamlining the supply chain (Fonterra Co-Operative Group, 2018). Along with this, the inventory manager in the global market is another competitive advantage of the company. This shows that they have advantage than their competitors which include Arla Foods, Saputo and SADAFCO.
Fonterra’s follow their own branding strategy of its own brands and alliances brands as a dairy solution. The company owns brands will get the strategic freedom to form their own presence in the market penetration strategies (Fonterra Co-operative Group, 2018). The company make use of the business to a business model rather than forming a high profile Fonterra consumer brand which is one of the essential factors through which they can make the market differentiation strategy. The image given below reflects the secondary and primary branding of the company.
Environmental scanning is the process through which the gathering of information related to the events and their relationships takes place within organisation external and internal environments. The environment scan is conducted by the Fonterra Company and the related 4 factors that affect the company are discussed below.
The political and legal factors include the tax regulations, change in rules and regulations and others that can lead to the impact on the working of the company. Fonterra Company deals with trade barriers and protectionism which includes trademarks, labelling, quotas and bio-diversity arguments (Armstrong, et al 2014). All these elements are essential for the company to be taken care because they are expanding their business in different markets due to which they need to ensure that their business activities are not copied by the other companies. Along with this, they ensure that their business practice is not affecting bio-diversity. In addition, the company is able to expand their business in the different market due to free trade arrangements and negotiation. Deregulation of markets is one of the positive element due to which the company was able to expand their business operations (Fonterra Co-operative Group, 2018).
Products and services
With this, the Fonterra Company faces the threat of the legal challenges on the grounds of the health or environment in New Zealand by the government as the concern of the government towards the environment is growing. The company is getting the positive response from the Anti-competition commission who allow the rise in the large mergers of the company. Though, the company might face some of the issues because the government of New Zealand is increasing the regulations related to the environmental safety and protection which means the company is obliged to follow each and every regulation. The act which was introduced by them was Environment Act 1986 and Resource Management Act 1991 (RMA).
The economic factors include inflation rate, currency fluctuation, GDP of the country and many other factors that can affect the working of the company. The currency valuation is one of the factors which affect the company as they operate their business in different countries which mainly include US and Australia (Armstrong, et al 2014). The currency value in these countries is different due to which their profit might get affected positively or negatively. Along with this, Fonterra Company deals with the cyclic nature of the commodity milk and production prices. Fonterra Company faces the global demand exceeding supply with this they find the continued consolidation of the customers and suppliers in the domestic and international market.
One of the major economic factors includes the GDP of the country. In the year 2016, the GDP was 189.29 which increased to 205.85 in the year 2017. This shows that there was a rise in the GDP which leads to the rise in the purchasing power of the customers that are present in the market (Trading Economics, 2018).
The social factors include the change in the customer behaviour and preference for buying or making the decision towards the purchase of products. Fonterra found that there is an increase in the demand of the consumer market and rise in the labelling standards of the products which is one of the positive elements of the company. In addition, this is found that there is growth in nutrition and bio markets which offers the benefit of the profit to the company. On the other hand, the company faced the cultural differences in the different areas with respect to the perception of milk (Edmonds, 2017). Genetically modified is one of the issues which are faced by the company in the dairy products. These cultural differences make the company include the diverse range of products to meet the needs. Though, instead of maintaining the wide products range the company face the cultural differences issues.
Core competency
The technological factors include the change or up-gradation of the technology and their use in the business. Along with this, the environmental factors include the waste, pollution, recycling of the environment or atmosphere of the surroundings. The technology has brought the new ways that help the company to feedstocks for the greater productivity and eliminate the emissions which help them in securing the environment (David, 2011). In addition, the technology has brought the easy availability of the ingredients and other products which is a positive aspect for the company as they can earn more and more profit due to the technological benefits. Advance technology is offering the reductions in by-products along with the decrease in the energy consumption at the time of processing. For example; use of insulating which reduce the consumption, Smart automation systems and many others.
The environmental issues that affect the company are the seasonal nature of the milk supply in New Zealand. Along with this, the unpredictability of the climate is also a threat for the company’s operations. In addition to this, there is intergeneration on the farm sustainability of the dairy farming (David, 2011).
In the New Zealand market, this has been found that the dairy products market is very competitive as the availability for the company who are operating the business of the dairy products is increasing in numbers. The top competitors of the company those are present in the New Zealand market include Arla Foods, Saputo and SADAFCO. Arla foods give the tough competition to the Fonterra company in the market as the company is able to generate approx. 89% of the revenue of Fonterra. Moreover, the Saputo is also operating the business in a market with the similar food products and with this they are able to generate 67% of Fonterra’s revenue (Fonterra Co-operative Group, 2018).
Business ethics take into the consideration responsibility not only in the workplace of the company but also across the environmental, cultural and the social structure of the communities. Business ethics is followed by the Fonterra Company with the help of which they are able to deal with the accountabilities and the issues that are involved in the scientific research, protection of consumers with the overall structure (Fonterra, 2018).
People
The people over here include the employees that are present within the organisation. The ethical standard followed by the Fonterra shows that managers can communicate with every employee. They maintain the shared passion, diversity, experience of our worldwide team and ensure that the company can deliver effectively to their employees.
Key competitive advantage
Profit
The company is able to meet the needs of the customers and this is the reason they are able to earn the profit in New Zealand. In the year 2015, the company was able to register the 183% hike in the net profit after tax that is higher at $506 million (Fonterra Dairy For Life, 2015). It is essential for the company to generate the profit for the better return on investment, to meet the goals of company and for contributing in the GDP of New Zealand.
Planet
Fonterra Company performs the operations in the environment due to which they ensure not to harm the environment (Smith, 2016). The company perform social responsibility in which a clean, sustainable environment and continuous improvement in the production and transportation of the products. This is considered as one of the big issue in the country with this government.
Digital media and electronic marketing within the business play a vital role in the marketing of the business. The company invest the amount and time in social media which is an effective digital communication method that is used to generate the awareness and promote the products. The social media channels that are used by the company include Facebook, Twitter, YouTube and others. Links are: Facebook- https://www.facebook.com/pg/Fonterra/posts/ , You Tube- https://www.youtube.com/watch?v=fnzk3er6nFQ. Through these channel, Fonterra can target a large number of audience which include children, youth, adults and old age people but the special focus is done of old age and children. Along with this, the company frequently update the details on these social media sites as this helps them in evolving in the effective communication (Rebeiro, 2016).
The influence of the consumer-generated information for effective marketing is essential to evaluate. This has been found that nowadays people update the information after visiting the place. This information includes the experience of the customers which include positive and negative aspects. This is the fact the customer generated information can leads to positive behaviour for other customers. Along with this, the experience and visit of the company will promote the products that are offered by Fonterra which leads to the effective marketing.
|
Segmentation |
Basis |
Description |
|
Geographic |
Region Locality |
Fonterra company segment the market on the basis and regions as they ensure that their products get easily available in different regions. This is the reason there is the presence of the numerous stores in the market (Hollensen, 2015). Along with this, most of the stores are present at the prime location due to which they are able to target the local people at most. |
|
Demographic |
Age Income level |
Fonterra company targets the people with different age groups include 5-10 years, 10-25 years, 25-45 years, 45-60 and 60+. This is evident from the promotion done by the company on different channels such as on you tube; the advertisement is done by company which include children’s. In addition, the products which are offered by the company are easily available to the people with different income groups including higher, middle and lower (Kotler, 2015). |
|
Psychographic |
Lifestyle |
The Lifestyle of the people is changing and people are becoming more focused towards the healthy products that they are consuming to remain fit. This is the main reason due to which the dairy products are more in demand by the people of New Zealand. |
|
Behavioural |
Buying motives |
Buying motive is one of the factors on which the company segment the market. Most of the people like the products which are offered by the Fonterra company this shows that they have the motive to buy the products that are offered by the company (Lovelock and Patterson, 2015). |
Fonterra Company makes use of the differentiation targeting strategy in which they target the multiple segments in which the primary target market of the company includes people with the different age group mainly old age people with age of 60+ with the middle and high-income group. Along with this, the major focused customer people also include the people who consume dairy products on regular basis. In addition, the customers who work with the motive to purchase the products are also targeted by the company. This strategy of targeting is used by the company so that they can target the maximum number of the customers at the time which will help the company to attain the motive of profit.
Branding
Older age
The major target profile for the company in the current scenario is old age people as they require the real nutrition in the current era which is good for their body. At this age, the people want to keep their body fit and healthy for which proteins and proper nutrition are must. This is fact with the growing age they start feeling conscious for health due to lack of nutrition in them and require the good bone density for which they dairy products consumption is the best option. This shows that the target customer profile for the company is old man with the age of 65 who is dealing with the issue of joint pain, weakness and weak eye sight. Considering the same, he needs more nutrients which are possible with the proper and healthy diet. Old man makes use of dairy products and it is considered as part of their lifestyle (The Sydney Morning Herald, 2007). This also reflects their behaviour of making use of the dairy products as they understand the value and have sufficient knowledge which makes them to consume the products.
Children
Another important target profile for the company is children with the age group of 10 years who is at the growing age. The name of child is Sam who needs more of the dairy products as this is the age when he starts moving to the adolescence and into the adulthood. The basic need of Sam includes calcium and proteins for which they consume more and more dairy products (Stringleman, 2014). In the lifestyle of Sam he makes use of the milk on daily basis at early in the morning before going to school and in night when he goes to bed. This shows that it is part of the lifestyle of the child. Along with this, he also makes use of other products offered by brand which include Yoghurt, Galaxy, and many others.
Conclusion
In the end, it can be concluded that Fonterra Company is performing their operations successfully in the market of New Zealand. Though, in the market, the company face the different issues from the external forces which include the political and legal obligations that they need to fulfil, change in the social preference and the impact on the environment of New Zealand. Along with this, the internal analysis reflects the positive element that the company has which contribute to the survival of the company. This is clear from the analysis that the company has made use of emerging technologies in effective manner in the New Zealand market due to which they are able to meet the goals for the effective marketing. This marketing strategy influences the segmented and targeted audience to make the purchase of the products. In the end, the two major target customer profiles are discussed.
References
Armstrong, G., Adam, S., Denize, S. and Kotler, P. (2014). Principles of marketing. 6th edition. Welbourne: Pearson Australia.
Browden, S., Scott, A.P. and Rowarth, J.S. (2013). Critical success factors when going global: New Zealand dairy companies. Retrieved from: https://www.grassland.org.nz/publications/nzgrassland_publication_2529.pdf
David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
Edmonds, P. (2017). Fonterra moves with consumer trends. Retrieved from: https://agrihq.co.nz/#
Fonterra. (2018). Our Markets. Retrieved from: https://www.fonterra.com/nz/en/about/our-markets.html
Fonterra Co-Operative Group. (2018). Fonterra Dairy Solutions. Retrieved from: https://www.vallyon.net/dl/MV+FonterraPublic.pdf
Fonterra Dairy For Life. (2015). Annual Review 2015 Fonterra Co-operative Group Limited. Retrieved from: https://www.fonterra.com/content/dam/fonterra-public-website/phase-2/new-zealand/pdfs-docs-infographics/pdfs-and-documents/financial-results/pdf-fonterra-annual-review-2015.pdf
Fonterra. (2018). About Fonterra. Retrieved from: https://www.fonterra.com/nz/en/about.html
Fonterra. (2018). Fonterra releases first Sustainability Report on environmental and social performance. Retrieved from: https://www.fonterra.com/nz/en/our-stories/media/fonterra-releases-first-sustainability-report-on-environmental-and-social-performance.html
Fonterra. (2018). Our Ambition and Values. Retrieved from: https://www.fonterra.com/nz/en/careers/life-at-fonterra/our-ambition-and-values.html
Fonterra. (2018). Our Brands. Retrieved from: https://www.fonterra.com/nz/en/about/our-brands.html
Hembry, O. (2012). Fonterra boss outlines vision for dairy giant. Retrieved from: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10795378
Hollensen, S. (2015). Marketing management: A relationship approach. India: Pearson Education Limited.
Kotler, P. (2015). Framework for marketing management. India: Pearson Education.
Lovelock, C. and Patterson, P. (2015). Services marketing. Australia: Pearson.
Rebeiro, L. (2016). Fonterra and Social Media. Retrieved from: https://livingfreely2016.wordpress.com/2016/05/23/fonterra/
Smith, S.D. (2016). 3 Ps of Corporate Social Responsibility. Retrieved from: https://www.business2community.com/social-business/3-ps-corporate-social-responsibility-01576197
Stringleman, H. (2014). Fonterra targets audience of two billion. Retrieved from: https://farmersweekly.co.nz/#
The Sydney Morning Herald. (2007). Fonterra runs NZ market from Australia. Retrieved from: https://www.smh.com.au/business/fonterra-runs-nz-market-from-Australia-20070831-wej.html
Trading Economics. (2018). New Zealand GDP. Retrieved from: https://tradingeconomics.com/new-zealand/gdp
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